Detroit receiving an emergency financial manager would help state, Oakland County leaders say

FILE - In this Jan. 3, 2013 file photo, Detroit Mayor Dave Bing answers a question during a news conference in Detroit. DetroitÕs budget crisis, which has the city on the verge of a possible state takeover, has only worsened the long-term dissatisfaction that residents of many Detroit neighborhoods have with the delivery of public services like police, fire, garbage and street lighting. Mayor Dave Bing is expected to discuss those issues in his State of the City Address on Wednesday, Feb. 13, 2013. (AP Photo/Carlos Osorio, File)

Michigan Gov. Rick Snyder addresses the media in his office in Detroit, Thursday, Feb. 21, 2013. The governor said that he's at least a week away from deciding if Detroit needs an emergency manager to confront its $327 million budget deficit and $14 billion long-term debt. Snyder told reporters that he considers the city's drastic population loss over 60 years to be the main reason for its financial woes. (AP Photo/Carlos Osorio)

After decades of population loss, financial problems and reduced city services, today could be the day that Michigan's largest city loses control of its finances.

Michigan Gov. Rick Snyder indicated to Detroit Mayor Dave Bing in a Thursday phone conversation that he will make an announcement regarding the city on Friday, according to the mayor's office.

Watch a report on today's News at noon.

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Last week, a state Financial Review Team said the city has a $327 million general fund deficit and more than $14 billion in long-term pension and health care liabilities that it's not capable of resolving.

Snyder has a month from the date of the team's report to make a decision, which could include the appointment of an emergency financial manager to the city.

"It's not unexpected," Oakland County Executive L. Brooks Patterson said of a possible state takeover in Detroit. "I don't think he had any other option."

Detroit, Patterson said, has been given numerous chances to resolve its financial problems and has failed to do so.

"Wall Street looks at the intervention of an emergency manager as a positive," he said.

Patterson repeated his opinion that a state takeover and state-appointed manager in Detroit will be viewed positively, unlike a municipal bankruptcy, and that Oakland County will keep its AAA bond rating.

Nevertheless, Oakland County Treasurer Andy Meisner, in a Thursday afternoon email to Patterson, his deputy and the county budget director, suggested the county might do some "pre-emptive outreach to the ratings agencies to bolster our position."

"If they're going to ding us on this they will, but I think we should at least discuss ways of minimizing that prospect," Meisner wrote.

Meisner added, "We are in some sense judged by what happens in the city. I agree with the assessment that from the ratings agencies' perspective, someone to go in and get their fiscal house in order is a positive thing.

"However, I do think we're doing everything we can do to maintain the rating even while things in the city are going through real challenges."

Schimmel, who's also worked as a state-appointed receiver in Ecorse and Hamtramck, said the worst thing the state could do is to take no action.

"Detroit's credit affects the state of Michigan and all of its municipalities' credit to some extent," Schimmel said.

"There are some things that are going to affect the whole state -- not just Oakland, but the whole state -- and there are going to be other things that are going to be real hard on Detroit and Wayne County," Schimmel said.

"I think it's the right thing to do. I don't think you can do nothing. I think you have to fix it, so I would say the effect of appointing an emergency manager -- if that's what he does -- it's a positive, because it means we're dealing with the problem."

Pontiac's finances have been under state control since March 2009, and Schimmel, the city's third emergency financial manager, has indicated he'll be leaving City Hall this spring or summer.

Since former Gov. Jennifer Granholm first appointed an emergency financial manager to the Pontiac, nearly every city service has been contracted with a third party, including police and fire protection. The city's expenditures are down from about $55 million to $29 million annually, but the city's property tax values also have fallen by more than half during the same time frame.

Opponents have argued that the loss of local control is undemocratic, and that the process has seen the sale of many city-owned properties and numerous layoffs. The payroll in Pontiac has gone from a peak of nearly 1,000 city employees to fewer than 100.

Schimmel spoke by phone from Lansing, where he was attending an informational meeting on the state's new emergency manager law, Public Act 436.

When the law takes effect on March 28, it will restore many of the powers that emergency managers had with Public Act 4, repealed by voters in the November election.

Public Act 436 presents distressed communities with four options: A consent agreement with the state, the appointment of an emergency manager, mediation or a Chapter 9 bankruptcy filing.

Schimmel and the state's other existing emergency financial managers will continue working under the new law, and their title will change to "emergency manager." Since Aug. 8, they've worked under Public Act 72 of 1990. On that day, Public Act 4 was suspended when Proposal 1 was placed on the ballot at the direction of the Michigan Supreme Court.

"I believe that you have to do this first before you declare bankruptcy," Schimmel said of appointing an emergency manager.

If a state-appointed manager can't achieve enough savings to balance the city's budget, then "it may take more than that -- (taking) you into a bankruptcy situation," he said.

"I've heard from so many who live and work in Pontiac that they are now getting the police response they weren't getting before," Savoie said.

"Detroit is a major part of the metropolitan area and whatever can be done to bring the city back and provide the necessary services, and provide a downtown where people want to live and visit -- that benefits the entire area."

Savoie emphasized that bringing in an emergency manager shouldn't be "about the employees," he said. "It should be about the residents."

"If Detroit goes downhill, it can affect all of our ratings," Roncelli said.

An emergency manager, Roncelli said, is not only brought into a community to maintain it, "but also to improve it."

In addition to Pontiac, the cities of Allen Park, Benton Harbor, Ecorse and Flint have state-appointed emergency financial managers, as do the school districts in Detroit, Highland Park and Muskegon Heights.

David Kasdan, Oakland University assistant professor of political science, said a takeover could be a neutral or positive move for Oakland County.

"This is staving off a really bad situation (in Detroit)," he said.

Should Detroit Police be subject to more cutbacks, for example, that could mean greater crime in the city and in border communities.

Kasdan believed Detroit City Council will be the biggest opponent of the move.

"Some have hinted they may resign because they'll have no power," he said.

"The ultimate accountability is to the welfare of the public."

After being given a fair chance, if elected representatives aren't doing a good job representing the public interest, "there needs to be some alternative action," he said.